Gustav puts Red Cross deep in debt
Agency to launch fund-raising push as storms line up
WASHINGTON - The American Red Cross said that it is going deep into debt to fund a $70 million Hurricane Gustav relief effort, an unusual occurrence even as the nation's biggest disaster-aid charity braces for more powerful storms.
The Red Cross has raised less than $5 million toward its Gustav expenses, officials said. To recoup its Gustav cost - most of it borrowed money - the nonprofit organization plans to roll out an aggressive national campaign tomorrow.
In 2005, the Red Cross borrowed money for the first time in its 127-year history when it took out a $340 million loan to help pay for its $2 billion response to Hurricanes Katrina and Rita. The nonprofit organization quickly raised the money to cover the debt.
But since Gustav weakened as it churned in the Gulf Coast, Americans struggling in a soft economy have not responded with an outpouring of giving as they did three years ago when Katrina left indelible images of devastation and suffering. Gustav spared New Orleans the death and destruction that forecasters predicted, but also dampened donations to the Red Cross, which mounted one of its largest mobilizations in years.
Fund-raising is "nowhere near the pace that we would need it to be," said Joe Becker, senior vice president for Red Cross disaster services. He called the situation "daunting."
"There's a sense that, 'Oh wow, they dodged a bullet,' " he said. "But there's a large number of people with a lot of need there, and the Red Cross is going to be there for quite a while."
The gap between Gustav expenses and donations is occurring at a perilous time for relief groups. An unusually high number of US disasters this year has taxed charities - from wildfires in California to tornadoes across the South. With their resources depleted, the same charities are mounting efforts for Tropical Storm Hanna, which is lashing the Eastern Seaboard this weekend, and Hurricane Ike, which could hit Florida tomorrow, and Tropical Storm Josephine.
"They told us it would be a big hurricane season, and they were right. We're kind of in the soup here," Becker said. "We're resourcing Hanna, and we'll resource every brother and sister storm behind it. . . . The country needs a strong Red Cross."
Massive power outages in Louisiana have forced the Red Cross to open more shelters in the New Orleans area and serve half a million hot meals each day.
"The 700,000 or 800,000 people without power is causing us to launch a tremendous feeding operation on a scale that's much bigger than we were thinking," Becker said. "We're borrowing the money. As hard as it might be to raise the $70 million that this one costs, now we've got Hanna and Ike and Josephine behind it."
Other nonprofit groups also prepared for the worst in Gustav and provided shelter, food, and clothing for thousands of evacuees. The Salvation Army spent in excess of $1 million on Gustav, but has raised just $30,000 to cover it. Save the Children spent more than $100,000 on diapers, cots, and bassinets at shelters, but has raised only $35,000. Catholic Charities USA, which has spent more than $200,000, has taken in $10,000.
"Gustav, in damage, pales in comparison to Katrina," said the Rev. Larry Snyder, president of Catholic Charities. "But with over 2 million people being evacuated and the expense incurred there, it's not a small disaster."
The charities could collect more donations in coming days, but with Gustav nearly gone from the headlines, some officials fear they might not break even.
"The attention of the general public moved off Hurricane Gustav so quickly," said Jeffrey Towers, Red Cross chief development officer. "People were expecting something so dramatic and vast relative to Katrina that when the storm came to shore less than a Category 4, the immediate response was, 'Oh, that wasn't so bad.' "
The Red Cross has federal responsibility for providing relief to the nation's biggest catastrophes but operates largely on private donations and receives little government money.
After facing sharp criticism for its fumbled response to Katrina, the Red Cross did not take a chance on Gustav, which had the potential to be the biggest disaster since. The agency dispatched more than 3,000 volunteers to the Gulf Coast, blanketing the region with supplies and setting up more than 500 shelters in 14 states. 